Transparency and Accountability Network

The Millennium Challenge Corporation, a US government corporation, released its annual set of scorecards on November 9 and for the second time in as many years the Philippines has failed the MCC's scorecard eligibility for funding under its Compact program. As a result, the country is disqualified from receiving aid funding from the US government through the MCC to spur economic growth. Under the Compact program of the MCC, governments can receive hundreds of millions of dollars in aid funding to invest in programs to address areas such as health, education, infrastructure and anticorruption. In the control of corruption indicator, which is based on the World Bank Institute's Control of Corruption Index, the Philippines was ranked in the 26th percentile of economies that are considered lower middle income countries. A country has to be above the median in its income category to pass an MCC indicator. The MCC Scorecard, the tool it uses to assess countries' eligibility to receive US government funding that could run in the hundreds of millions of dollars, consists of 17 third-party indicators that cover three broad policy areas - Ruling Justly, Investing in People and Economic Freedom.

For the first time, the Philippines is considered a lower middle income country with a per capita income of US$1,890. Countries with per capita income between of US$1,855 and US$3,855 are considered to be lower middle income. As a result of moving to a higher income category, the Philippines declined on all but one of the 17 indicators, and is now failing in 7 of them. In last year's assessment, the Philippine failed in only 3 indicators - Control of Corruption, Health Expenditures and Primary Education Expenditures. In this year's assessment, the Philippines is also now failing in Rule of Law, Immunization Rates, Girls' Primary Education Completion, and Business Startup.

On October 16, the MCC announced that it was giving the Philippine government US$5.5 million to complete "beneficiary analysis, engineering designs, and environmental and social impact assessments" to enhance its proposal for a possible Compact grant. In December of last year, after the Philippines failed the scorecard for the first time, the MCC stated that it was still in negotiations with the Philippine government regarding its Compact proposal, but said no Compact agreement would be signed with the Philippines unless it improved on is control of corruption indicator.

In the 2009 Scorecard (released November 2008), the Philippines for the first time failed (i.e. was below the median) the Control of Corruption indicator. Control of Corruption is considered by the MCC as the only pass/fail indicator. No country can receive funding under the Compact program unless it passes at least half of the 17 indicators and the Control of Corruption indicator.